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Visual Guide to Hedge Funds by Richard Wilson

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CHAPTER 7 Event-Driven Strategy

The event-driven hedge fund seeks to generate returns by accurately assessing, predicting, and trading on corporate events. The hedge fund will often target corporations in a particular sector or market capitalization, and analysts will scrutinize the corporations for trading opportunities, such as mergers and acquisitions (M&A), major changes in the business, earnings reports, restructurings, bankruptcies, financial distress, new product launches, and other events that impact the value and market price of a particular corporation. Event-driven strategies include merger-arbitrage strategies, distressed-debt strategies, capital-structure arbitrage, special situations, and activist strategies.

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